ECB Keeps Rates on Hold, Awaits Inflation Data Ahead of September Decision

The European Central Bank (ECB) has kept interest rates on hold despite renewed turmoil in the Middle East pushing oil prices higher and threatening another spike in inflation. ECB governor Gabriel Makhlouf warned that the next two sets of inflation data for the euro zone will be crucial in deciding whether to increase interest rates in December.

Makhlouf emphasized that the decision not to change rates this week primarily reflects the bank's judgment that the effects of the June increase are still working through the economy. He also noted that new economic projections for the bloc will be available in September, allowing the ECB to more confidently assess its stance on interest rates.

The governor highlighted two key factors he will be paying attention to: whether the recent rebound in energy prices proves sustained or fades, and whether core inflation remains stable. Makhlouf also reiterated that the central bank is focused on how wages respond to rising prices and whether the increase in energy prices becomes more persistent.